On the Ilyce Glink Show on WSB Radio: how long will low mortgage rates last, rising home and house prices, is the economy getting better and the falling budget deficit.
I received two emails this week from regular listeners of the Ilyce Glink Show on WSB Radio. They tell me they love the show, but that “I’m always so negative about everything.”
There’s this misperception that journalists and reporters, the so-called fourth estate, are at the forefront of causing the negative tide in the economy. I’ll hear people say, “If you weren’t saying things were bad, people wouldn’t believe them and everything would get better.”
People say this to me and I can tell that they believe it. But, it’s utter nonsense. Journalists can’t invent the news. Our job is to report on it, translate it, and serve it up to you in a way that makes sense and helps you live your lives better.
It’s why I got into what’s known as service journalism in the first place. I loved real estate – always loved watching how my friends lived in their homes – and bringing some of their insights to you over the years, breaking stories along the way, just seemed like a good idea.
In any case, I can’t say to you, “The economy is great,” if it isn’t and all of the numbers are pointing to negative information. That would be fiction – a noble and worthy cause, but at the moment, not mine.
So, when my mother (who has been a great real estate agent for 30 years) tells me to stop being so negative about the economy because people might believe it, I tell her that when the economy stops producing all kinds of negative news, I’ll stop saying the economy is declining.
But what I can do is point out where I think the economy is getting better these days – and I say this with some concern that what is really happening is a short, positive blip – one that might turn out to be a mini-mountain along a bumpy bottom rather than a climb to the top. But, here goes:
1. Mortgage interest rates are still at historic lows. That’s right, but how long will low mortgage rates last? If you want to refinance to a 15-year fixed rate loan, you can probably get one for less than 3 percent, if you’ve got great credit. And by great credit I mean anything over 760. Still, that’s an amazing interest rate and one that is propelling the stock market to new highs every day.
Why? Because companies can borrow at near zero and anything they make is sheer profit. Super-low interest rates have been a God-send to the investment and financial communities and they’ve taken full advantage.
You can take advantage by investing in the stock market and by refinancing your mortgage or by investing in real estate.
2. Homes are selling and prices are rising. Every month, it seems like another 500,000 people are moving from being underwater in their homes to positive equity.
If you’re one of those people, that’s no small matter. It allows you to draw a line in the financial sandbox in which you live and start to repair your life and credit.
If you want to sell and haven’t been able to up until now, you can probably sell and move with the rising home and house prices. Getting America moving helps families take jobs in other locations, provide better livings for their own families, and feel better about themselves. It’s good all around.
3. We have a falling budget deficit that’s faster than anticipated. Thanks to Fannie Mae and Freddie Mac contributing an unexpected lump of change and rising tax revenues, the budget deficit fell by $200 billion more than anticipated.
4. Cars are selling. Over the past few years, Americans were driving cars until they literally became rust buckets – cars were about 11 years in annual age which means that for every new car you saw on the street, there was a 20-year old bucket of bolts being held together with chewing gum that was making its way down the interstate.
Eventually, cars fall apart and if you live in a place that doesn’t offer great mass transportation, you’ll need your own set of wheels. So, that’s good news.
But new studies are showing that kids today don’t care that much about driving. It isn’t the same rite of passage for them. I can attest to that since my kids aren’t that eager to drive and those in their 20-somethings would rather live cleaner and greener in walk-to communities. (I started writing about walk-to communities more than 20 years ago. Nice to see they’re now being valued by a new generation.)
So, I don’t know what will happen going forward, but I do think we’ll continue to sell a fair number of cars, which means profits for GM and Honda and other companies that employ a large number of American workers.
There are some economic dangers that I see, too. But for today, let’s focus on the positive and see how much better we all feel.
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